Are you looking for a way to deal with significant amount of unsecured debts? When you own credit cards, there is always possibility for the users to grapple with it. Not to mention, they usually come along with high interest rates and low spending limits. It won’t do you any good for using such debt. At the worst case scenario, your financial house might be collapsing. To deal with it, you need debt relief options. Does national debt relief affect your credit score then? Let’s see here to find this out.
Debt Relief Method #1 – Bankruptcy
Does national debt relief affect your credit score? The answer to it is yes, without doubt. You can better understand how debt relief could affect credit score from its debt relief options with one of them being bankruptcy. When you have great amount of unsecured debts, it is best to make fresh financial start. To do so, you need to temporarily reduce your credit score. When you declare bankruptcy, the score will take the hit. That is why the answer to does national debt relief affect your credit score is yes. Listen closely.
You current credit score determines how much score that drops. If we have to put it simply, the higher the score is, the more it might drop. Either way, the end result remains the same. National debt relief does affect credit score. However, this debt relief method is quite risky. It is difficult to procure loans, low interest credit cards, and lines of credit that are priced reasonably with it. Does national debt relief affect your credit score? Yes, but you need to make sure to use this relief option in the direst financial situation only.
Debt Relief Method #2 –Settlement
Now that you know the answer to does national debt relief affect your credit score, let us tell you that the second method is actually better in many cases. It has mild effect on your credit score after all. Once you enroll for the settlement program, your credit score will surely drop. The effect on credit score with debt relief option here pretty much follows the rule. Higher credit score drops farther than the lower one. This emphasizes the answer to Does national debt relief affect your credit score enough, don’t you think?
What makes settlement any different than the bankruptcy if that is the case then? Actually, the difference is that the settlement is less jarring and short lived. The score that drops is half the score that dropped by the bankruptcy method. Also, since it drops less, you can rebuild your credit easier and quicker. It takes about 2 to 4 years to wrap things up, but it can wipe away thousands of dollars in unsecured debts for sure. That is why the debt settlement method is way more popular than the bankruptcy choice. Does national debt relief affect your credit score? You know the answer already.